Pages

Tuesday, June 5, 2012

Walker hangs on in Wisconsin

This could be a glimpse at the presidential election later this year. Despite Republicans' anti-worker/austerity/safety-net-cutting platform, the Dems are tainted by Obama, his perceived failed policies, the lack of jobs, the economy, the deficit, etc.

38 comments:

It's bad news but not, perhaps, for Obama. According to folks at Firedoglake.com, exit polls are showing similar margins in favor of Obama as for Scott Walker. Also reported by one commenter that O was supported by 53% of the people who voted for Walker.

Maybe Wisconsinites are just gluttons for punishment like, say, the Irish.

Negative — Political wonks look at this chiefly as a key test of the effectiveness of dark money post-Citizens United. The verdict is unequivocally that dark money is effective and contributions are worthwhile in terms of payback in effecting an election. Expect a flood of dark money in opposition to Obama in the general. It could swamp him (double entendre intended).

What is unclear is how effective the divide and conquer strategy was. Did the GOP manage to pit private sector workers against public sector workers successfully. Were at least a portion of private sector workers voting with the GOP to cut public worker bargaining power, e.g., in the expectation of cutting their own taxes by reductions in public worker compensation and benefits? I don't think that is clear yet. But I believe the GOP strategists will see it that way.

The fact you are even talking about Wisconsin in the context of a Democratic President means it is bad. It means this state will be in pla and even if he wins it he will have to spend resources. Resources he didn't have to spend last time.

Trixie:"But Citizens United? I just don't get that. If there is ONE political issue that unites everyone across political factions? It's get the money out of g-damn politics."

Every ad person should know that the effectiveness of ads is unrelated to how people like them. The message is delivered subliminally and if it is well crafted and delivered people respond. This knowledge has been imported into political ads.

So while Citizen's United is hugely unpopular as an issue, people still fall for the ad barrages, because they can't help themselves from doing so. It's not at the conscious level.

Just as consumer demand for products that people would never choose is manufactured by advertising; so too, are political candidates marketed.

One gets the feeling that the monster has barely woken up, stretched and cracked its knuckles. We've seen nothing yet as far as what it's capable of in terms of coordinated repression and money driven electioneering. Just wait until he's had his coffee and a bit of breakfast.

The message that taxes don't fund spending isn't going to make much sense to the person-on-the-street. The truth never seems to.

I think that's a pretty good point, and I wish there was a more focused and pointed body of MMT literature on price stability and demand-pull inflation. It's out there, but it tends to be interspersed randomly with a lot of other stuff on the job guarantee, countercyclical demand stimulus and related issues. It would be good if the economists would generate an article that could serve as the locus classicus of the MMT theory of inflation.

MTT should continue to make clear to people that the government always has the option of spending more than it taxes, and that the debt hysterians usually don't understand what they are talking about. But there is also the issue of the use of taxation for regulation of aggregate demand and prices. When this issue is avoided too often, the discourse degenerates into what I call "Free Lunch MMT" - a crude blogospheric version of MMT that seems to suggest we could do without taxes altogether and just create all the money we need by "crediting bank accounts". Most people, including all the main MMT theorists, recognize that at some realistic point this process just dilutes the purchasing power of dollars, erodes savings, etc. But it is not sufficiently highlighted, and the prevalence of Free Lunch MMT floating around the blogs tends to discredit MMT, IMHO.

The chartalist dimension of MMT focuses on the role of taxation in generating demand for the currency. But there is more than that involved.

Also, there is the important but controversial issue of the role of taxation in restoring social and political equality. Even if we don't need Jamie Dimon's money to "fund" our spending, it might still be a good iodea to take a lot of money away from him juts because it is unhealthy for our democracy when people have that much damn money.

Good points. I think the public simply can't get the idea that deficits are sustainable. If you lead with this argument, you lose. But more than that I part company with MMT on taxes. I believe it is essential to impose higher taxes on the rich. I say that not bc I want their money but to help flatten out the distribution of income. Time to let the Bush tax cuts expire.

I would like to eliminate corporate taxes but no way with the way taxes are tilted toward the wealthy today.

So I sometimes read Baker or Summer and thoroughly disagree on their economics but on politics I agree.

According to MMT, taxes "drive" money in the sense that money in a modern economy is currency and currency gets value because the govt only accepts its own liabilities in satisfaction of liabilities to it. Once currency has value, the government can then use it to move private resources to public use.

The naive commonsense view, to which most mainstream economists and many heterodox economists subscribe is that revenue is needed to fund government spending and borrowing simply postpones revenue collection and adds interest cost too.

It should be obvious to anyone who can use a dictionary that "fiat currency" implies that government creates currency at will, and so it doesn't need any other source of funds. MMT explains this in terms of the currency issuer-currency user distinction.

This is really not at all difficult to understand, for example, in comparison with most economic theory, let alone computational models. It just is not being explained widely enough in an accessible format.

Politics is driven by narratives. The narratives of the both parties are flat-out wrong, because they are both based on the government as currency user fallacy. A new narrative that is compelling is needed .

Dan K: "Also, there is the important but controversial issue of the role of taxation in restoring social and political equality. Even if we don't need Jamie Dimon's money to "fund" our spending, it might still be a good iodea to take a lot of money away from him juts because it is unhealthy for our democracy when people have that much damn money."

The narrative has to include economic rent. Michael Hudson is quite good at presenting this already. The based MMT-based should integrate it. Actually the UMKC school narrative incorporates MMT, and Bill Black and Michael Hudson. The potential for a powerful new narrative is there. It just needs more workup for wide and accessible distribution. A single presentation incorporating all the major points needs to be issued in multiple formats (working paper, video, book, slideshow, journal article, FAQ).

"The article tells a familiar story: The public sector has mismanaged its finances. The union wages the metro area is required to pay its bus drivers are excessively generous. (Ralph Cramden, apparently, now lives in a mansion and drives a Mercedes). Bus driver health care costs are unsustainable, and their retirement benefits are a shameless demand on the “backs of the tax-payers.” There’s no way people are going to pay more taxes to....."

I look at this situation as "rent seeking" in a way. State & Local govts extracting monopoly "rents" from the residents to take care of their own.

It is/will continue to become a major problem as the Federal fiscal policy continues to leave "9 bones for 10 dogs".

State and local govts will use the coercive force of taxation to extract "rents" from those in the "non state and local govt sector".

Expect more of the type of chaos evidenced in Wiscy these past few weeks to spread to other states.

Taxes are needed to withdraw net financial assets from non-government. The amount of the governments fiscal balance is determined exogenously by non-government saving propensity. What should be taxed is determined on the basis of the principle that taxation is a negative behavior incentive, so taxes should be levied on socially, politically and economically undesirable behaviors.

An example of socially undesirable behavior is that which needlessly affects public health negatively, e.g. alcohol and tobacco. "Sin taxes" fall into this category.

Politically undesirable behavior is class behavior that undermines democracy, such as aggregation of wealth in a power elite whose influence captures the state.

Economically undesirable behavior is economic rent, which is parasitical on the circular flow of production-distribution-consumption, and negative externalities prevent price discovery in markets from operating in terms of true cost.

Couldnt agree more. Suspend habeas corpus, ID them all and round them up and send them to GITMO imo, perhaps even better, target many for killing on Obama's new "kill list", all fine with me...

That said, take a look:

Fed's z.1 here page 90:

http://federalreserve.gov/releases/z1/Current/z1.pdf

This sheet shows who has the NFAs.

It's mostly foreigners, the Fed, households, state and local govts, and public and private pension funds.

These are the hoarders.

I dont know if "the rich" have many of the NFAs (dont see that category listed in the Z.1). I guess they could be in "households" (high net worth households) but that is about it.

Looks like you could tax away all of "the rich's" NFAs and it would do no good compared to what would still be left with the true hoarders of the NFAs: zombie foreigners, morons at the Fed, and greedy coercive state and local govts.

True story: Long time community family barber shop in my area. Low prices for families. RENTED location in a strip center.

He was "paying the rent".

He was "under the dreaded rentier".

Lease is up, landlord jacked up the rent, guy had to close in face of the rent increase in 2009 as rents had went up in bubble since his original agreement.

THE LANDLORD WAS THE STATE OF MARYLAND PUBLIC EMPLOYEES PENSION FUND WHO OWNED THE STRIP MALL.

Who/what really is the enemy? It is a much larger entity than "the rich". Kill them all and confiscate all their NFAs for all I care, and looks like we still have a major problem.

All domestic private ownership is ultimately by households, because households own firms, non-profits with no equity excepted, but they become "owned" either by other non-profits or the state, if they have assets on dissolution.

Not sure that this is a proper characterization. Funds own a lot of tsys because they are mandated to hold a certain % of high rated securities. Banks and financial firms also use tsys in their ops due to their money-like nature.